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Nexen Inc. 02 July 2008

Update Report – 1Q 08 Results

Higher exploration activity to sustain revenue growth going forward

Common BUY Fundamental research indicates a 30% upside in the common stock over the next 6–12 months. We
Direct
have access
calculated to theprice
the target fullbased
report free of charge
on fundamental at a weighted average of target
factors, using
Stock prices obtained through DCF and comparative valuation methodologies. We continue to take a
http://www.iirgroup.com/researchoracle/viewreport/show/20156
6-12 month investment horizon for this stock, as the commodities market in which the company
operates is highly cyclical and therefore, trends can be captured more accurately with a shorter
investment horizon.
Ticker: NXY.TO
Target price: C$53.03
Current price: C$40.661 We upgrade the common stock a BUY with a 6–12 month target price of C$53.03

NYSE Stock BUY The NYSE stock is expected to increase approximately 40% over the next 6–12 months as the 30%
fundamental upside is augmented by approximately 10% upside attributable purely to the anticipated
appreciation of the Canadian dollar against the US dollar over the same period.2

Ticker: NXY
We upgrade the NYSE stock a BUY with a 6–12 month target price of US$55.82.
Target price: US$55.82
Current price: US$39.751

Supervisor: Nirav Shah

Analyst: Simi Panicker
Editor: Matthew Bridle
Global Research Director:
Satish Betadpur, CFA
Next news due:
2Q 08 results, 17 July 2008
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If
this report is provided to you by your broker under the Global Settlement, you may now also access (free of
charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming
5-30 days for readers with a shorter trading horizon. These are available online only at
www.researchoracle.com

Report summary
Nexen Inc. (Nexen) reported robust growth in 1Q 08 net revenues and net income given increased
hydrocarbon production primarily at its Buzzard oilfield coupled with higher average realized
hydrocarbon prices during the quarter. Going forward, we remain optimistic regarding that the
company’s developments projects will increase its hydrocarbon production. In addition, the company’s
Long Lake Project and development of Ettrick field are on track to meet the company’s production
guidance for the year. Furthermore, an increase in hydrocarbon prices in the medium term in line with
our outlook adds to our optimism. Therefore, at the current levels, we find Nexen’s common stock as
an attractive investment opportunity.

Currency impact for US investors2

The impact by itself of the anticipated currency movements on the NYSE stock (now US$39.75),
without considering changes in the share price, is positive and is expected to be:

Over 6 months: US$47.84

Over 12 months: US$42.80

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